[Congressional Record Volume 143, Number 152 (Tuesday, November 4, 1997)]
[House]
[Pages H9883-H9887]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     NO ELECTRONIC THEFT (NET) ACT

  Mr. COBLE. Mr. Speaker, I move to suspend the rules and pass the bill 
(H.R. 2265) to amend the provisions of titles 17 and 18, United States 
Code, to provide greater copyright protection by amending criminal 
copyright infringement provisions, and for other purposes, as amended.
  The Clerk read as follows:

                               H.R. 2265

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``No Electronic Theft (NET) 
     Act''.

     SEC. 2. CRIMINAL INFRINGEMENT OF COPYRIGHTS.

       (a) Definition of Financial Gain.--Section 101 of title 17, 
     United States Code, is amended by inserting after the 
     undesignated paragraph relating to the term ``display'', the 
     following new paragraph: ``The term `financial gain' includes 
     receipt, or expectation of receipt, of anything of value, 
     including the receipt of other copyrighted works.''.
       (b) Criminal Offenses.--Section 506(a) of title 17, United 
     States Code, is amended to read as follows:
       ``(a) Criminal Infringement.--Any person who infringes a 
     copyright willfully either--
       ``(1) for purposes of commercial advantage or private 
     financial gain, or
       ``(2) by the reproduction or distribution, including by 
     electronic means, during any 180-day period, of 1 or more 
     copies or phonorecords of 1 or more copyrighted works, which 
     have a total retail value of more than $1,000,

     shall be punished as provided under section 2319 of title 18. 
     For purposes of this subsection, evidence of reproduction or 
     distribution of a copyrighted work, by itself, shall not be 
     sufficient to establish willful infringement.''.
       (c) Limitation on Criminal Proceedings.--Section 507(a) of 
     title 17, United States Code, is amended by striking 
     ``three'' and inserting ``5''.
       (d) Criminal Infringement of a Copyright.--Section 2319 of 
     title 18, United States Code, is amended--
       (1) in subsection (a), by striking ``subsection (b)'' and 
     inserting ``subsections (b) and (c)'';
       (2) in subsection (b)--
       (A) in the matter preceding paragraph (1), by striking 
     ``subsection (a) of this section'' and inserting ``section 
     506(a)(1) of title 17''; and
       (B) in paragraph (1)--
       (i) by inserting ``including by electronic means,'' after 
     ``if the offense consists of the reproduction or 
     distribution,''; and
       (ii) by striking ``with a retail value of more than 
     $2,500'' and inserting ``which have a total retail value of 
     more than $2,500''; and
       (3) by redesignating subsection (c) as subsection (e) and 
     inserting after subsection (b) the following:
       ``(c) Any person who commits an offense under section 
     506(a)(2) of title 17--
       ``(1) shall be imprisoned not more than 3 years, or fined 
     in the amount set forth in this title, or both, if the 
     offense consists of the reproduction or distribution of 10 or 
     more copies or phonorecords of 1 or more copyrighted works, 
     which have a total retail value of $2,500 or more;
       ``(2) shall be imprisoned not more than 6 years, or fined 
     in the amount set forth in this title, or both, if the 
     offense is a second or subsequent offense under paragraph 
     (1); and
       ``(3) shall be imprisoned not more than 1 year, or fined in 
     the amount set forth in this title, or both, if the offense 
     consists of the reproduction or distribution of 1 or more 
     copies or phonorecords of 1 or more copyrighted works, which 
     have a total retail value of more than $1,000.
       ``(d)(1) During preparation of the presentence report 
     pursuant to Rule 32(c) of the Federal Rules of Criminal 
     Procedure, victims of the offense shall be permitted to 
     submit, and the probation officer shall receive, a victim 
     impact statement that identifies the victim of the offense 
     and the extent and scope of the injury and loss suffered by 
     the victim, including the estimated economic impact of the 
     offense on that victim.
       ``(2) Persons permitted to submit victim impact statements 
     shall include--
       ``(A) producers and sellers of legitimate works affected by 
     conduct involved in the offense;
       ``(B) holders of intellectual property rights in such 
     works; and
       ``(C) the legal representatives of such producers, sellers, 
     and holders.''.
       (e) Unauthorized Fixation and Trafficking of Live Musical 
     Performances.--Section 2319A of title 18, United States Code, 
     is amended--
       (1) by redesignating subsections (d) and (e) as subsections 
     (e) and (f), respectively; and
       (2) by inserting after subsection (c) the following:
       ``(d) Victim Impact Statement.--(1) During preparation of 
     the presentence report pursuant to Rule 32(c) of the Federal 
     Rules of Criminal Procedure, victims of the offense shall be 
     permitted to submit, and the probation officer shall receive, 
     a victim impact statement that identifies the victim of the 
     offense and the extent and scope of the injury and loss 
     suffered by the victim, including the estimated economic 
     impact of the offense on that victim.
       ``(2) Persons permitted to submit victim impact statements 
     shall include--
       ``(A) producers and sellers of legitimate works affected by 
     conduct involved in the offense;
       ``(B) holders of intellectual property rights in such 
     works; and
       ``(C) the legal representatives of such producers, sellers, 
     and holders.''.
       (f) Trafficking in Counterfeit Goods or Services.--Section 
     2320 of title 18, United States Code, is amended--
       (1) by redesignating subsections (d) and (e) as subsections 
     (e) and (f), respectively; and
       (2) by inserting after subsection (c) the following:
       ``(d)(1) During preparation of the presentence report 
     pursuant to Rule 32(c) of the Federal Rules of Criminal 
     Procedure, victims of the offense shall be permitted to 
     submit, and the probation officer shall receive, a victim 
     impact statement that identifies the victim of the offense 
     and the extent and scope of the injury and loss suffered by 
     the victim, including the estimated economic impact of the 
     offense on that victim.
       ``(2) Persons permitted to submit victim impact statements 
     shall include--
       ``(A) producers and sellers of legitimate goods or services 
     affected by conduct involved in the offense;
       ``(B) holders of intellectual property rights in such goods 
     or services; and
       ``(C) the legal representatives of such producers, sellers, 
     and holders.''.
       (g) Directive to Sentencing Commission.--(1) Under the 
     authority of the Sentencing

[[Page H9884]]

     Reform Act of 1984 (Public Law 98-473; 98 Stat. 1987) and 
     section 21 of the Sentencing Act of 1987 (Public Law 100-182; 
     101 Stat. 1271; 18 U.S.C. 994 note) (including the authority 
     to amend the sentencing guidelines and policy statements), 
     the United States Sentencing Commission shall ensure that the 
     applicable guideline range for a defendant convicted of a 
     crime against intellectual property (including offenses set 
     forth at section 506(a) of title 17, United States Code, and 
     sections 2319, 2319A, and 2320 of title 18, United States 
     Code) is sufficiently stringent to deter such a crime and to 
     adequately reflect the additional considerations set forth in 
     paragraph (2) of this subsection.
       (2) In implementing paragraph (1), the Sentencing 
     Commission shall ensure that the guidelines provide for 
     consideration of the retail value and quantity of the items 
     with respect to which the crime against intellectual property 
     was committed.

     SEC. 3. INFRINGEMENT BY UNITED STATES.

       Section 1498(b) of title 28, United States Code, is amended 
     by striking ``remedy of the owner of such copyright shall be 
     by action'' and inserting ``action which may be brought for 
     such infringement shall be an action by the copyright 
     owner''.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
North Carolina [Mr. Coble] and the gentleman from Massachusetts [Mr. 
Frank] each will control 20 minutes.
  The Chair recognizes the gentleman from North Carolina [Mr. Coble].


                             General Leave

  Mr. COBLE. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days to revise and extend their remarks on the bill 
under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from North Carolina?
  There was no objection.
  Mr. COBLE. Mr. Speaker, I yield myself such time as I may consume.
  H.R. 2265, Mr. Speaker, is a much needed legislative response to a 
1994 court case that created a loophole which currently prevents the 
Department of Justice from prosecuting Internet copyright theft. The 
bill represents the hard work of industry representatives, officials 
from the Department of Justice and the Copyright Office, and the 
members of the Subcommittee on Courts and Intellectual Property and the 
full Committee on the Judiciary.
  Again, this is a good bill that has been brought to the floor in a 
bipartisan manner, and I urge its adoption.
  Mr. Speaker, I rise in support of H.R. 2265, the No Electronic Theft 
[NET] Act. Introduced by Mr. Goodlatte of Virginia, this bill 
represents an important legislative response to those persons who 
cavalierly appropriate copyrighted works and share them with other 
Internet thieves.
  Industry groups estimate that counterfeiting and piracy of 
intellectual property--especially computer software, compact discs, and 
movies--cost the affected copyrights holders more than $11 billion last 
year; some claim the actual figure is closer to $20 billion. 
Regrettably, the problem has great potential to worsen. The advent of 
digital video discs and the development of new audi-compression 
techniques, to cite two prominent examples, will only create additional 
incentive for copyright thieves to steal protected works.
  The NET Act constitutes a legislative response to the so-called 
LaMacchi case, a 1994 decision authored by a Massachusetts Federal 
court. In LaMacchia, the defendant encouraged lawful purchasers of 
copyright software and computer games to upload these works via a 
special password to an electronic bulletin board on the Internet. The 
defendant then transferred the works to another electronic address and 
encouraged others with access to a second password to download the 
materials for personal use without authorization by or compensation to 
the copyright owners. While critical of the defendant's behavior, the 
court precluded his prosecution under a Federal wire fraud statute, 
stating that this area of the law was never intended to cover copyright 
infringement. The court also noted that the relevant criminal 
provisions of the Copyright Act and title 18 of the United States Code 
historically required prosecutors to prove that a defendant acted 
``willfully'' and for ``commercial advantage'' or ``private financial 
gain''--a threshold standard which did not apply to LaMacchia, who 
never benefited financially from his transgressions.
  Accordingly, the NER Act proscribes the willful act of copyright 
infringement, either for ``commercial advantage or private financial 
gain''; or by reproducing or distributing one or more copies of one or 
more copyrighted works with a total retail value of more than $1,000. 
The legislation specifically encompasses acts of reproduction or 
distribution the occur via ``electronic means'' which is to say, by 
computer theft. In addition, ``financial gain'' is defined as the 
acquisition of ``anything of value, including the receipt of other 
copyrighted works.'' This change would enable the Department of Justice 
to pursue a LaMacchia-like defendant who steals copyrighted works but 
gives them away--instead of selling them--to others. This legislation 
includes stiff penalties and prison terms for infringers.

  Mr. Speaker, the Subcommittee on Courts and Intellectual Property, 
during its markup of the NET Act, passed an amendment to ensure that 
the bill would not modify liability for copyright infringement, 
including the standard of willfulness for criminal infringement. After 
full committee consideration of H.R. 2265, negotiating sessions that 
included representatives of the Copyright Office, the Department of 
Justice, and relevant industry organizations produced compromise 
language, now inserted in the bill, that provides additional protection 
for entities which transmit copyrighted works over the Internet.
  More specifically, this language is intended to clarify that a 
finding of willfulness cannot be established solely from evidence of 
reproduction or distribution of copyrighted works, and thus that 
prosecutions based solely on such evidence will not be pursued. While 
it is not the majority rule, some cases have held in the past that 
evidence of reproduction or distribution of such works, by itself, is 
sufficient to establish willfulness under 17 U.S.C. 506. This language 
rejects the holding of those cases, and clarifies that in order for 
criminal liability to attach to a defendant's conduct, the Government 
must prove something more than the mere reproduction or distribution of 
copyrighted works in establishing willfulness.
  It should be emphasized that proof of the defendant's state of mind 
is not required. The Government should not be required to prove that 
the defendant was familiar with the criminal copyright statute or 
violated it intentionally. Particularly in cases of clear infringement, 
the willfulness standard should be satisfied if there is adequate proof 
that the defendant acted with reckless disregard of the rights of the 
copyright holder. In such circumstances, a proclaimed ignorance of the 
law should not allow the infringer to escape conviction. Willfulness is 
often established by circumstantial evidence, and may be inferred from 
the facts and circumstances of each case.
  Further, a violation act of infringement performed by the defendant 
is required by this section. Evidence of reproductions or 
distributions, including those made electronically on behalf of third 
parties, would not, by itself, be sufficient to establish willfulness 
under the NET Act.

  Finally, the requirements of a showing of financial gain or 
commercial advantage under 17 U.S.C.506(a) is not intended to imply 
that all types of financial gain or commercial advantage can, by 
themselves, trigger a finding of willful infringement. I should 
emphasize strongly that this bill addresses criminal, not civil, 
copyright liability. To repeat: nothing in H.R. 2265 affects civil 
liability for copyright infringement.
  Mr. Speaker, the public must come to understand that intellectual 
property rights, while abstract and arcane, are no less deserving of 
protection than personal or real property rights. The intellectual 
property community will continue its works in educating the public 
about these concerns, but we in the Congress must do our job as well by 
ensuring that piracy of copyrighted works will be treated with an 
appropriate level of fair but serious disapproval. We will fulfill this 
obligation today by passing H.R. 2265.
  Allow me to conclude by acknowledging the conspicuous hard work of 
the gentleman from Virginia, Mr. Goodlatte, who is also the bill's 
sponsor; and the ranking subcommittee member from Massachusetts, Mr. 
Frank. They and the other members of our subcommittee have truly worked 
in a bipartisan manner to expedite passage of the NET Act.
  I reserve, Mr. Speaker, the balance of my time.
  Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself such time as 
I may consume.
  As with the previous bill, this is a bipartisan bill brought forward 
by the subcommittee to try to deal with some technical problems. Once 
again, it is a response to a court decision, and I would just note by 
the way there are people who, here and in other places, from time to 
time object to court decisions. Often the court decisions that people 
object to are statutory interpretations. And we should be very clear. 
When a court has done something that many of us disagree with because 
of how they interpret a statute, we retain full power to overturn that, 
as we just did in the previous bill, as we are doing in this bill, and 
I have to say, in fairness to the courts, sometimes the statutory 
interpretation and question is a little strained; sometimes it is 
accurate because we were a little sloppy, and we had the ability to 
correct the inadvertent policy problem.

[[Page H9885]]

  This is a very important policy. What we are essentially saying is if 
you trash somebody else's property, even if you are not doing it for 
money but you are just doing it because you wanted to show how smart 
you are and because you are seriously maladjusted and cannot make an 
impression on anybody in any other way, it is as criminal as if you 
stole. You have no right to use technical skills to interfere with 
other people's property.
  And those who somehow admire that, those who try to make that skill 
into something that they boast of, are dead wrong morally. And that is 
what this bill says, ``You have no right to interfere with the work and 
intellectual property of other people.''
  And it is precisely those who most understand the importance of the 
new technology to humanity who ought to be joining us in supporting 
this bill, because this is a threat to the ability of individuals to 
get the full use and enjoyment of it.
  There is just one point I wanted to comment on as a result of, I 
think, a very useful process. When this bill left committee, we had one 
somewhat unresolved issue. It was not our intention in trying to make 
clear that you are criminally liable if you interfere with other 
people's property regardless of your motive; it was not our intention 
to lower the barrier by which people could find themselves criminally 
liable for acts that were not intentional. We were talking here, we 
were aiming at people who deliberately went and screwed up other 
people's work even if they were not doing it for money. There was a 
legitimate concern brought forward by, among others, the gentleman from 
Virginia and people who testified that we not go beyond that.
  Now I do have to say there was one sort of misapplication or 
misdescription in the committee report. I did offer an amendment in 
subcommittee that tried to make clear that the bill was not intended to 
broaden the definition or reduce the burden that had to be met in order 
to show that somebody had done something intentionally.
  We have two issues here: Was it intentional? and, why was it 
intentional? This bill only deals with why it is intentional. This bill 
says, ``If you did it and you meant to do it, we don't care why. We 
care that you did it and you shouldn't have, and the fact that you 
didn't have a monetary incentive isn't relevant.''
  Some people fear that that might also mean that people who had done 
something without any intent to interfere with other people's work 
would somehow be implicated. The amendment I offered in subcommittee 
was aimed not at changing the definition of ``willful'' or making it 
harder to meet but making clear that this bill itself did not do that. 
And that amendment was adopted.
  Indeed, Mr. Speaker, I have a proposal that we should put on the 
legislative keyboard a phrase that says this act does not do what this 
act does not do because we often have the problem of people reading 
into legislation things that are not there.
  In any case, that turned out to be insufficient, and at the full 
committee the gentleman from Virginia proposed a further clarification. 
We had some disagreement about the specifics, but we agreed that he had 
brought up a very valid point, and as a result of the legislative 
process working, the bill that comes before us today which we can do 
under suspension has new language which makes it clear that there is no 
effort here and no intention on our part to make it easier to go after 
people when they were not acting intentionally. I believe the gentleman 
from Virginia is probably going to be expounding on that, and it will 
be very clear to people.
  So I want to thank my colleagues on all sides of the committee. This 
is a bill which was noncontroversial in its purpose.

                              {time}  1330

  On two occasions we amended it to make clear that we would be dealing 
very specifically, it obviously would have been somewhat ironic in a 
bill that was aimed at curing legislative sloppiness to get sloppy 
again, and I think the bill that we have now brought forward does that 
appropriately.
  Mr. Speaker, I reserve the balance of my time.
  Mr. COBLE. Mr. Speaker, I yield 8 minutes to the gentleman from 
Virginia [Mr. Goodlatte], the author of the bill.
  Mr. GOODLATTE. Mr. Speaker, I thank the gentleman for yielding me 
this time.
  Mr. Speaker, I rise in support of H.R. 2265, the No Electronic Theft, 
or NET Act of 1997. I would like to thank the gentleman from North 
Carolina [Mr. Coble]; the gentleman from Massachusetts [Mr. Frank], the 
ranking Member; and also the gentleman from Utah [Mr. Cannon] for their 
leadership and support on this important legislation which I 
introduced.
  The NET Act closes a loophole in our Nation's criminal copyright law 
and gives law enforcement the tools they need to bring to justice 
individuals who steal the products of America's authors, musicians and 
software producers. Additionally, the bill promotes the dissemination 
of creative works online and helps consumers realize the promise and 
potential of the Internet.
  The Internet is a tremendous opportunity. Its development has 
contributed to the economic growth we have enjoyed in the last few 
years. Its true potential, however, lies in the future when students 
and teachers can access a wealth of information through the click of a 
mouse, and consumers can fully benefit from electronic commerce. For 
this to happen, creators must feel secure that they are protected by 
laws as effective in cyberspace as they are on Main Street.
  The NET Act clarifies that when Internet users or any other 
individuals sell pirated copies of software, recordings, movies or 
other creative works, use pirated copies to barter for other works, or 
simply take pirated works and distribute them broadly even if they do 
not intend to profit personally, such individuals are stealing. 
Intellectual property is no less valuable than other property.
  Pirating works online is the same as shoplifting a videotape, book, 
or record from a store. Through a loophole in the law, however, 
copyright infringers who pirate works knowingly and willfully, but not 
for profit, are outside the law. This situation has developed because 
the authors of our copyright laws could not have anticipated the nature 
of the Internet, which has made the theft of copyrighted works 
virtually cost-free and anonymous.
  The Internet allows a single computer program or other copyrighted 
work to be illegally distributed to millions of users, virtually 
without cost, if an individual merely makes it available on a single 
server and points others to the location. Other users can contact that 
server at any time of day and download the copyrighted work to their 
own computers. It is unacceptable that today this activity can be 
carried out by individuals without fear of criminal prosecution.
  Imagine the same situation occurring with tangible goods that could 
not be transmitted over the Internet, such as copying popular movies 
onto hundreds of blank tapes and passing them out on every street 
corner or copying personal software onto blank disks and freely 
distributing them throughout the world. Few would disagree that such 
activities are illegal and should be prosecuted. We should be no less 
vigilant when such activities occur on the Internet. We cannot allow 
the Internet to become the Home Shoplifting Network.
  H.R. 2265 makes it a felony to willfully infringe a copyright by 
reproducing or distributing 10 or more copyrighted works with a value 
of at least $2,500, within a 180-day period, regardless of whether the 
infringing individual realized any commercial advantage or private 
financial gain. It also clarifies an existing portion of the law that 
makes it a crime to willfully infringe a copyright for profit or 
personal financial gain. It does so by specifying that receiving other 
copyrighted works in exchange for pirated copies, bartering 
essentially, is considered a form of profit and is as unlawful as 
simply selling pirated works for cash. Additionally, the NET Act calls 
for victim impact statements during sentencing and directs the 
sentencing commission to determine a sentence strong enough to deter 
these crimes.
  During the Committee on the Judiciary's consideration of H.R. 2265, I 
offered an amendment to clarify that

[[Page H9886]]

criminal copyright liability should not apply to those who merely 
intended to reproduce or distribute a copyrighted work without any 
accompanying criminal intent. With assurances from the chairman that 
this issue would be addressed, I withdrew that amendment. I am happy to 
report that language addressing this issue is included in the bill we 
are considering today, and would like to make a few comments regarding 
the intent of that provision.
  This language is intended to clarify that a finding of willfulness 
cannot be established solely from evidence of the reproduction or 
distribution of copyright-protected works and thus, that prosecutions 
based solely on such evidence will not be pursued. While it is not the 
majority rule, some cases have held in the past that evidence of the 
reproduction or distribution of such works by itself is sufficient to 
establish willfulness under 17 U.S.C. 506. This section rejects the 
holding of those cases and clarifies that in order for criminal 
liability to attach to a defendant's conduct, the Government must prove 
something more than the mere reproduction or distribution of 
copyrighted works in establishing willfulness.
  It should be also emphasized that proof of the defendant's state of 
mind is not required. The Government should not be required to prove 
that the defendant was familiar with the criminal copyright statute or 
violated it intentionally. Particularly in cases of clear infringement, 
the willfulness standard should be satisfied if there is adequate proof 
that the defendant acted with reckless disregard of the rights of the 
copyright holder. In such circumstances, a proclaimed ignorance of the 
law should not allow the infringer to escape conviction. Willfulness is 
often established by circumstantial evidence and may be inferred from 
the facts and circumstances of each case.
  Further, a volitional act of infringement performed by the defendant 
is required by this section. Evidence of reproductions or 
distributions, including those made electronically on behalf of third 
parties, would not, by itself, be sufficient to establish willfulness 
under this act.
  Finally, the requirement of a showing of financial gain or commercial 
advantage under 17 U.S.C. 506(a) is not intended to imply that all 
types of financial gain or commercial advantage can, by themselves, 
trigger a finding of willful infringement. It should also be made clear 
that this act deals only with criminal copyright liability. Nothing in 
this act affects civil liability for copyright infringement.
  Mr. Speaker, the United States is the world leader in intellectual 
property. We export billions of dollars worth of creative works every 
year in the form of software, books, videotapes and records. Our 
ability to create so many quality products has become a bulwark of our 
national economy. By closing this loophole in our copyright law, the 
NET Act sends the strong message that we value the creations of our 
citizens and will not tolerate the theft of our intellectual property.
  I urge my colleagues to support H.R. 2265.
  Mr. FRANK of Massachusetts. Mr. Speaker, I yield myself 1 minute 
simply to say that I appreciate the very careful discussion of that 
point that the gentleman from Virginia [Mr. Goodlatte] just engaged in, 
and I want to express my agreement with the exposition that the 
gentleman from Virginia gave. I think we have as a result of his 
comments a very clear expression of the consensus that exists on the 
committee as to the relevant standards that need to be met to find 
criminal liability.
  Mr. Speaker, I yield back the balance of my time.
  Mr. COBLE. Mr. Speaker, I yield 3 minutes to the gentleman from Utah 
[Mr. Cannon], who has worked dutifully on this bill.
  Mr. CANNON. Mr. Speaker, I would like to thank the gentleman from 
North Carolina [Mr. Coble]; the gentleman from Massachusetts [Mr. 
Frank]; and the gentleman from Virginia [Mr. Goodlatte], the author of 
the bill, for their hard work on this matter.
  Mr. Speaker, information technologies are the wellspring of our 
Nation's future, and my home State of Utah is one of the primary 
sources. The idea of networking computers came from Novell. WordPerfect 
created the standard for word processing.
  Utah is one of the top five U.S. centers for software development. 
Utah high-tech companies have generated sales in excess of $6.5 billion 
last year.
  The heart of the Utah software industry is Utah County, the largest 
county in my district. Given the composition of my district, I am 
honored to be an original cosponsor of the NET, No Electronic Theft 
Act. I also need to compliment again those who worked so hard to bring 
this issue to a head today.
  This is an important issue. In today's booming economy, U.S. computer 
software is one of the primary driving engines, with exports topping 
$26 billion per year. But software piracy is a significant and 
unjustified burden that American software companies are bearing. Last 
year piracy cost U.S. software companies an estimated $11.2 billion 
globally.
  The NET Act is a concrete step toward curbing both domestic and 
international software theft. Current copyright law has a loophole for 
thieves who give software away, but do not sell it. Three years ago a 
Massachusetts Federal district court in U.S. versus LaMacchia held that 
a pirate who had given away 1 million dollars worth of commercial 
software through a bulletin board could not be prosecuted because the 
pirate had not been compensated by his fellow thieves.
  Playing Robin Hood may have made sense when the Sheriff of Nottingham 
was extracting tribute from the peasantry, but playing Robin Hood on 
the Internet is a recipe for disaster for our domestic software 
industry. That is why we need the NET Act now.
  The act is simple. It focuses on the damage done to the software 
owner, not just the money put into the pocket of the pirate. By doing 
so, the act gives the Department of Justice the tools to pursue U.S. 
software pirates who use the Internet as their primary conduit. By 
shutting down U.S. pirates, we can simultaneously curb domestic and 
overseas piracy. By doing so, we will boost one of our leading 
industries, enhance our exports and strengthen our competitiveness in a 
critical technological area.
  For these reasons, I urge an affirmative vote.
  Mr. COBLE. Mr. Speaker, I yield 1 minute to the gentleman from 
California [Mr. Rohrabacher].
  Mr. ROHRABACHER. Mr. Speaker, I would like to take this opportunity 
to thank the gentleman from North Carolina [Mr. Coble]; the gentleman 
from Virginia [Mr. Goodlatte]; and the gentleman from Massachusetts 
[Mr. Frank] for the excellent work that they are doing on this 
intellectual property rights issue.
  Intellectual property rights, especially when it concerns the 
entertainment industry and the software industry, is a vital part of 
the economy of California. We are talking about billions of dollars 
directly affecting the well-being of the people of my State and, yes, 
the people of our country.
  We have a balance of payment problem as well. Software and 
entertainment play such an important role in keeping America's balance 
of payments manageable. So these bills today, both the one we are 
discussing now and the one we discussed just prior to this, represent 
hard work and responsibility on the part of this committee, and I would 
like to congratulate these gentlemen for a job well done.
  Mr. COBLE. Mr. Speaker, I yield myself such time as I may consume.
  I just want to say that this bill is about preventing theft. It will 
close a gap that currently exists in the Copyright Act to arrest 
electronic piracy.
  I thank the gentleman from Virginia [Mr. Goodlatte]; the gentleman 
from Massachusetts [Mr. Frank]; and the gentleman from Utah [Mr. 
Cannon] and others on the subcommittee for the hard work that they did, 
and I specifically thank the gentleman from Massachusetts [Mr. Frank] 
and the gentleman from Virginia [Mr. Goodlatte] for having alluded to 
the manager's amendment included in today's bill.
  I have submitted for the Record an extensive statement describing the 
intent of that amendment, and I again thank all of the members of the 
subcommittee for their good work, Mr. Speaker.
  Mr. DELAHUNT. Mr. Speaker, I am proud to be a cosponsor of this 
legislation, and I rise to express my strong support for it.

[[Page H9887]]

  The age of the Internet promises enormous benefits--instantaneous 
communication from one end of the planet to the other, paperless 
financial transactions, access to vast libraries of information at the 
touch of a button.
  But these benefits are not without a price: the same technology that 
facilitates unprecedented access has also fostered a new breed of 
sophisticated criminals. Today's Internet pirates can download perfect 
digital copies of copyrighted works--from movies to musical recordings 
to video games--and distribute them to other Internet users without the 
knowledge or permission of the copyright holders.
  Software piracy carries enormous costs for our society. Last year, it 
cost copyright holders between $11 and 20 billion worldwide, with $2.3 
billion lost in the United States alone. That, in turn, meant the loss 
of many thousands of American jobs, higher prices to honest software 
purchasers, and a billion dollars in lost tax revenues.
  Most people who commit these crimes do so for financial gain. But 
increasingly these crimes are being committed by computer hackers who 
obtain copyrighted software from lawful users and post it on electronic 
bulletin boards, free for the taking.
  The present copyright law can do little to either deter or punish 
these crimes, because under current law there can be no culpability 
unless the defendant was seeking commercial gain. H.R. 2265 corrects 
that problem by criminalizing computer theft of copyrighted works 
whether or not the defendant derives a direct financial benefit from 
his actions.
  I believe this measure will help preserve the creative incentive on 
which so much of our prosperity--and the future of the Internet 
itself--depend.
  I urge support for the bill.
  Mr. BERMAN. Mr. Speaker, I rise in strong support of H.R. 2265, the 
NET Act.
  The enactment of H.R. 2265 is essential to the continuing growth of 
the Internet. Daily business developments attest to the pressing need 
for content to fill the pages of our newest medium for entertainment 
and mass communications. But that content will simply not be available 
unless its creators can be assured that their intellectual property 
will be protected.
  The decision of the Federal District Court in Massachusetts in 1994 
in U.S. v. LaMacchia, however, created a loophole which leaves 
copyright owners virtually defenseless against those who infringe 
copyright not for profit, but for the pure fun of it, as a top 
executive of the Recording Industry Association of America put it at 
the legislative hearing on H.R. 2265.
  We simply must make clear that there is no hacker defense to criminal 
copyright liability. Copyright owners' exclusive rights of public 
performance, distribution, and reproduction must be protected no less 
from the grad student who thinks content on the Internet should be free 
than from the pirate who reaps a fortune from his counterfeiting 
operation. The end result is the same: the substantial loss of revenue 
to intellectual property owners, increasingly as technology makes it 
possible for more and more content to be moved over digital networks.
  In enacting H.R. 2265, we make clear that the computer theft of 
copyrighted works is subject to criminal penalties, and in so doing 
exercise our constitutional responsibility to protect copyright. I urge 
my colleagues to vote for this important legislation.
  Mr. COBLE. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore [Mr. Packard]. The question is on the motion 
offered by the gentleman from North Carolina [Mr. Coble] that the House 
suspend the rules and pass the bill, H.R. 2265, as amended.
  The question was taken.
  Mr. FRANK of Massachusetts. Mr. Speaker, I object to the vote on the 
ground that a quorum is not present and make the point of order that a 
quorum is not present.
  The SPEAKER pro tempore. Pursuant to clause 5 of rule I and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.
  The point of no quorum is considered withdrawn.

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